Calculation of Annual Savings Needed to Meet a Retirement Coal varksheet, answer the following questions. Round vour answers to the nearest dollar. a. What annual incorne would Nice need for retirement? 5 b. What would her annual expected Social secunty benefit be? $ C. Niced expects to receive $1,200 per month from her defined-benefit pension at work. What is her annual benefit? $ d. How much annual retirement income will she need from her retirement funds? s. 5 Appendix A.1 to solve for the answer, Round Future Volue of a Single Amount in intermediate cakclations to four decimal places. 5 9 How much additional money will she still need to save for retirement? 5 calculations to four decinal places Investrent returns are asturned to be 3% aher inflation. 5 RUN THE NUMBERS Estimating Your Retirement Sawings Goal in Today's Dollars This worisheet will help you calculate the amount you need to set aside each year in today's dollars so that you will have adequate funds for your retirement. The exam: ple here assumes that a single person, Erik. McKartmann, is now 35 years old, hopes to retire at age 62 , has a current income of $80,000, currently saves and imvests about $4,800 per year to his employer's 401(k) retirement plan, antipates needing a retirement income of $64,000 per year assuming a spending lifestyle at 80% of current income ($80,0000.80), and will ive an additional 20 years beyond retirement. Investment returns are assumed to be 3% after inflation - a reasonable but conservative. estimate for a typical portfolio. The financial needs would differ if the growth rate of the investments were less than 3%. This approach simplifies the calculations and puts the numbers to estimate retirement needs into today's dollars. The amount saved must be higher if substantial inflation occurs. Present Value of a Series of Equal Amounts (an Annuity of $1 Received at the End of Each Period) (Used to Compute the Discounted Precant Valua of a c dix A-3 Future Value of a Series of Equal Amounts (an Annuity of $1 Paid at the End of Each Period) (Ised to Comoute the Compounded Future Value of a Stream of income Payments)